Scotiabank analyst Ben Isaacson has revised his price target for Canfor (CFPZF, Financial), reducing it from C$15 to C$14. Despite the adjustment, he maintains an Underperform rating on the stock. This change reflects cautious sentiment towards the company's future performance in the current market environment.
CFPZF Key Business Developments
Release Date: May 09, 2025
- Adjusted EBITDA (Lumber): $61 million in Q1, up $44 million from the previous quarter.
- Southern Yellow Pine Production: Increased by 18% due to new investments in Alabama and Arkansas.
- Western Canada Production: Decreased by 18% following closures of high-cost operations.
- Adjusted EBITDA (Pulp): $21 million in Q1, up $9 million from the prior quarter.
- Net Debt (Canfor Pulp): $72 million at the end of Q1.
- Available Liquidity (Canfor Pulp): $82 million at the end of Q1.
- Debt (Canfor excluding Canfor Pulp): Approximately $94 million at the end of Q1.
- Available Liquidity (Canfor excluding Canfor Pulp): $1.3 billion at the end of Q1.
- Capital Expenditures (Consolidated): Approximately $122 million in Q1.
- Projected Capital Spend (Lumber 2025): Approximately $250 million.
- Projected Capital Spend (Pulp 2025): $45 million, including capitalized maintenance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Canfor Corp (CFPZF, Financial) has a strong balance sheet with significant financial flexibility, allowing it to manage current industry headwinds and pursue strategic growth initiatives.
- The company has completed several strategic initiatives, resulting in a lower cost, globally diversified lumber platform.
- Canfor Corp (CFPZF) has seen benefits from significant capital investments in its US Southern operations, contributing to improved cost structure and resilience.
- The company's Pulp business generated solid financial results in the first quarter, supported by improved productivity and higher pulp sales realizations.
- Approximately 70% of Canfor Corp (CFPZF)'s production in the first quarter originated outside of Canada, reflecting a significant transformation of its lumber platform and improved geographic mix.
Negative Points
- There is significant uncertainty in the broader economic landscape due to ongoing trade disputes, impacting demand and pricing volatility.
- Lumber pricing is anticipated to remain volatile through 2025, with potential impacts from elevated duties and tariffs.
- Canfor Corp (CFPZF) faces uncertainty with respect to fiber supply later in the year due to elevated softwood lumber duties and the current trade environment.
- The company expects lower pulp pricing in the second quarter as trade disruptions weigh on market conditions.
- Despite strategic changes, less than 20% of Canfor Corp (CFPZF)'s total sales revenue is exposed to duties or trade disputes, indicating ongoing vulnerability to trade-related challenges.
